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FILED PURSUANT TO RULE 424(b)(1)
FILE NO. 333-49180
PROSPECTUS
109,514 SHARES
i2 TECHNOLOGIES, INC.
COMMON STOCK
This prospectus relates to the public offering, which is not being
underwritten, of 109,514 shares of our common stock held by one of our
stockholders.
The prices at which the stockholder may sell the shares registered
under this prospectus will be determined by the prevailing market price for the
shares or in negotiated transactions. We will not receive any of the proceeds
from the sale of the shares by the stockholder.
Our common stock is quoted on the Nasdaq National Market under the
symbol "ITWO." On November 15, 2000, the last sale price for our common stock
was $139.94 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE RISK FACTORS ON PAGE
4 TO READ ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF
COMMON STOCK BEING OFFERED BY THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is November 16, 2000.
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TABLE OF CONTENTS
Page
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<TABLE>
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Incorporation By Reference.....................................................2
Where You Can Find More Information........................................... 3
Our Company................................................................... 4
Risk Factors.................................................................. 4
Selling Stockholders......................................................... 12
Plan of Distribution......................................................... 13
Legal Matters................................................................ 14
Experts...................................................................... 14
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INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to that information. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this
offering is completed:
o Our annual report on Form 10-K for the year ended December 31, 1999;
o Our quarterly reports on Form 10-Q for the quarter ended March 31 and June
30, 2000;
o Our current reports on Form 8-K filed January 21, March 14 (as amended by
Form 8-K/A filed March 17), April 11 (as amended by Form 8-K/A filed June
1), April 19, May 12, June 22, and October 19, 2000; and
o The description of our common stock contained in our registration statement
on Form 8-A (File No. 0-28030), as filed with the SEC on March 20, 1996.
Any statement contained in the prospectus or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement
contained herein or in any applicable prospectus supplement or any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
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On October 17, 2000, our Board of Directors declared a two-for-one
stock split of our common stock, subject to approval by stockholders of an
increase in the number of our authorized shares of common stock. None of the
share-related data in this prospectus is adjusted to take into account the
proposed stock split.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission, or SEC. You may
read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from our Web site at www.i2.com or at
the SEC's Web site at www.sec.gov. However, the information on our Web site does
not constitute a part of this prospectus. You may obtain a copy of these
filings, at no cost, by writing or telephoning us at the following address. In
addition, we will provide without charge to each person, including any
beneficial owner, to whom a copy of this prospectus has been delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents incorporated by reference in this prospectus, other than exhibits and
schedules thereto, unless such exhibits or schedules are specifically
incorporated by reference into the information that this prospectus
incorporates. Written or oral requests for copies of these documents should be
directed to:
Investor Relations
One i2 Place
11701 Luna Road
Dallas, Texas 75234
Telephone: (469) 357-1000
You should rely on the information provided in this document or
incorporated in this document by reference. We have not authorized anyone to
provide you with different information. You should not assume that the
information in this document, including any information incorporated by
reference, is accurate as of any date other than that on the front of the
document.
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OUR COMPANY
i2 is a leading provider of marketplace e-business solutions designed to
help enterprises optimize business processes both internally and among trading
partners. Our solutions enable enterprises to significantly improve
efficiencies, collaborate with suppliers and customers, respond to market
demands and engage in dynamic business interactions over the Internet. Our i2
TradeMatrix comprehensive suite includes solutions for supply chain management,
customer relationship management and supplier relationship management. Further,
i2 TradeMatrix offers content and content management solutions as well as the
platform for integration and administration of private and public
e-marketplaces. i2 also provides consulting, training and maintenance in support
of these offerings.
Our principal executive offices are located at One i2 Place, 11701 Luna
Road, Dallas, Texas 75234, and our telephone number is (469) 357-1000.
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties that we do not
presently know or that we currently deem immaterial may also impair our business
operations.
If any of the following risks actually occur, they could materially
adversely affect our business, financial condition or results of operations. In
that case, the trading price of our common stock could decline.
OUR FINANCIAL RESULTS MAY VARY SIGNIFICANTLY FROM QUARTER TO QUARTER OR WE MAY
FAIL TO MEET EXPECTATIONS, WHICH MAY NEGATIVELY IMPACT THE PRICE OF OUR STOCK.
Our operating results have varied significantly from quarter to quarter in
the past, and we expect our operating results to continue to vary from quarter
to quarter in the future, due to a variety of factors, many of which are outside
of our control. Factors that could affect quarterly operating results include:
o volume and timing of customer orders;
o length of the sales cycle;
o customer budget constraints;
o announcement or introduction of new products or product
enhancements by us or our competitors;
o changes in prices of our products and those of our competitors;
o foreign currency exchange rate fluctuations;
o market acceptance of new products;
o mix of direct and indirect sales;
o changes in our strategic relationships;
o changes in our business strategy; and
o mix of our perpetual and term license sales.
Furthermore, customers may defer or reconsider purchasing products if
they experience a downturn in their business or if there is a downturn in the
general economy. We will continue to determine our investment and expense levels
based on expected future revenues. A significant portion of our expenses are not
variable in the short term, and we cannot reduce them quickly to respond to
decreases in revenues. Therefore, if revenues are below expectations, this
shortfall is likely to adversely and disproportionately affect our operating
results. In addition, we may reduce our prices or accelerate investment in
research and development efforts in response to competitive pressures or to
pursue new market opportunities. Any of these activities may further limit our
ability to adjust spending in response to revenue fluctuations. Revenues may not
grow at historical rates in future periods, or they may not grow at all.
Accordingly, we may not maintain positive operating margins in future quarters.
Any of these
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factors could cause our operating results to be below the expectations of public
market analysts and investors, and the price of our common stock may fall.
WE ANTICIPATE SEASONAL FLUCTUATIONS IN REVENUES, WHICH MAY CAUSE VOLATILITY IN
OUR STOCK PRICE.
The market price of our common stock has been volatile in the past, and the
market price of our common stock may be volatile in the future. Historically,
our revenues have tended to be strongest in the fourth quarter of the year. We
believe that our seasonality is due to the calendar year budgeting cycles of
many of our customers and our compensation policy that rewards sales personnel
for achieving annual revenue quotas. In future periods, these seasonal trends
may cause our quarter-to-quarter operating results to vary, which may result in
failing to meet the expectations of public market analysts and investors.
WE TYPICALLY ANTICIPATE SIGNIFICANT INDIVIDUAL LICENSE SALES. THEREFORE, OUR
OPERATING RESULTS FOR A GIVEN PERIOD COULD SUFFER SERIOUS HARM IF WE FAIL TO
CLOSE THE LARGE SALES EXPECTED FOR THAT PERIOD.
We generally derive a significant portion of revenues in each quarter from a
small number of relatively large sales. Moreover, due to customer purchasing
patterns, we typically realize a significant portion of our software license
revenues in the last few weeks of a quarter. As a result, we are subject to
significant variations in license revenues and results of operations if we incur
any delays in customer orders. If in any future period we fail to close one or
more substantial license sales that we expected to close in that period, this
failure could seriously harm our operating results for that period.
WE MAY NOT REMAIN COMPETITIVE, AND INCREASED COMPETITION COULD SERIOUSLY HARM
OUR BUSINESS.
Our competitors offer a variety of e-business solutions including supply
chain and other core processes. We segment our competition into several main
categories, including:
o internal development efforts by corporate information technology
departments;
o other business application software vendors, generally consisting
of two groups:
o larger enterprise resource planning-based vendors who are
attempting to add capabilities such as supply chain
planning or business-to-business collaboration to their
broad transaction system products; and
o smaller point-solution providers who are focused on a
particular industry or set of capabilities, including
vendors of demand planning, transportation management or
collaboration middleware; and
o other creators or operators of electronic marketplaces, typically
focused on specific industries or offering specific services across
industries, which may compete now or in the future with
marketplaces created or powered by i2.
Relative to us, our competitors may have one or more of the following
advantages:
o longer operating histories;
o greater financial, technical, marketing and other resources;
o better capabilities or functionality in specific areas;
o greater name recognition;
o additional product offerings; or
o a larger installed base of customers.
Current and potential competitors have established, or may establish,
cooperative relationships among themselves or with third parties to enhance
their products, which may result in increased competition. In addition, we
expect to experience increasing price competition as we compete for market
share, and we may not be able to compete successfully with our existing or new
competitors. If we experience increased competition, substantial harm may result
to our business, operating results and financial condition.
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OUR STRATEGY OF INCREASING OUR RECURRING REVENUE STREAMS BY SELLING
MARKETPLACE SERVICES TO E-MARKETPLACES AND THEIR PARTICIPANTS, IS UNPROVEN AND
MAY BE UNSUCCESSFUL.
As part of our business strategy, we are offering marketplace services,
content and the i2 TradeMatrix platform to trading communities and participants
in digital marketplaces. This strategy remains unproven. We are currently
providing only a limited portion of our intended i2 TradeMatrix services in only
a relatively small number of digital trading communities. We have limited
experience developing and operating digital marketplaces, and we cannot be
certain that these trading communities will be operated effectively, that
enterprises will join and remain in these trading communities, or that we will
develop and provide successfully all intended i2 TradeMatrix services. If this
business strategy is flawed, or if we are unable to execute effectively, our
business, operating results and financial condition could be substantially
harmed.
WE DEPEND ON OUR STRATEGIC PARTNERS AND OTHER THIRD PARTIES. IF WE FAIL TO
DERIVE BENEFITS FROM OUR EXISTING AND FUTURE STRATEGIC RELATIONSHIPS, OUR
BUSINESS WILL SUFFER.
From time to time, we have collaborated with other companies, including IBM,
PricewaterhouseCoopers and Ariba, in areas such as product development,
marketing, distribution and implementation. Maintaining these and other
relationships is a meaningful part of our business strategy. However, some of
our current and potential strategic partners are either actual or potential
competitors, which may impair the viability of these relationships. In addition,
some of our relationships have failed to meet expectations and may fail to meet
expectations in the future. We may not be able to enter into successful new
strategic relationships in the future.
ANY DECREASE IN DEMAND FOR OUR ENTERPRISE PRODUCTS AND SERVICES COULD
SIGNIFICANTLY REDUCE OUR REVENUES.
We derive a substantial portion of our revenues from licenses of our
enterprise products and related services. Enterprise products principally
include supply chain, logistics and other planning products. We expect license
revenues, including maintenance and consulting contracts, to continue to account
for a substantial portion of our revenues for the foreseeable future. As a
result, our future operating results will depend upon continued market
acceptance of these applications. However, our enterprise applications may not
achieve continued market acceptance. Competition, technological change or other
factors could decrease demand for, or market acceptance of, these applications.
Any decrease in demand or market acceptance of i2's enterprise offering could
substantially harm our business, operating results and financial condition.
WE ARE INVESTING SIGNIFICANT RESOURCES IN DEVELOPING AND MARKETING OUR
E-MARKETPLACE SOLUTIONS. THE MARKET FOR THESE SOLUTIONS IS NEW AND EVOLVING,
AND, IF THIS MARKET DOES NOT DEVELOP AS WE ANTICIPATE, OR IF WE ARE UNABLE TO
DEVELOP ACCEPTABLE SOLUTIONS, SERIOUS HARM WOULD RESULT TO OUR BUSINESS.
We are investing significant resources in further developing and marketing
enhanced products and services to facilitate public and private e-marketplaces.
For the first few months after we introduce new products and services, the
demand for, and market acceptance of, those products and services are subject to
a high level of uncertainty, especially where acquisition of our products or
services requires a large capital commitment or other significant commitment of
resources. Adoption of e-business software solutions, particularly by those
individuals and enterprises that have historically relied upon traditional means
of commerce and communication, will require a broad acceptance of new and
substantially different methods of conducting business and exchanging
information. These products and services involve a new approach to the conduct
of business, and, as a result, intensive marketing and sales efforts may be
necessary to educate prospective customers regarding the uses and benefits of
these products and services in order to generate demand. The market for this
broader functionality may not develop, competitors may develop superior products
and services, or we may not develop acceptable solutions to address this
functionality. Any one of these events could seriously harm our business,
operating results and financial condition.
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OUR i2 TRADEMATRIX PLATFORM MAY EXPERIENCE PERFORMANCE PROBLEMS OR DELAYS AS A
RESULT OF SERVICE INTERRUPTIONS.
i2 has entered into contracts with hosting companies to provide hosting services
for public and private marketplaces using the i2 TradeMatrix platform.
Dissatisfaction or problems with the services of the hosting provider or delays
or interruptions or other problems with service due to mechanical failure, human
error, security breaches, power loss and other facility failures, natural
disaster, sabotage, vandalism, or other similar events could result in a
reduction of business generated by the marketplace. In addition, failure of any
telecommunications providers to provide consistent data communications capacity
could result in interruptions in services. Each of these service providers could
experience outages, delays and other difficulties due to system failures
unrelated to our products, services and systems. Any damage to or failure of
these service providers could result in reductions in, or terminations of,
services supplied to our customers, which could have a material adverse effect
on our business.
IF WE PUBLISH INACCURATE CATALOG CONTENT DATA, OUR BUSINESS COULD SUFFER.
The accurate publication of catalog content is critical to our customers'
businesses. Our i2 TradeMatrix suite offers content management tools that help
suppliers manage the collection and publication of catalog content. Any defects
or errors in these tools or the failure of these tools to accurately publish
catalog content could deter businesses from participating in the i2 TradeMatrix
marketplaces, damage our business reputation and harm our ability to win new
customers. In addition, from time to time some of our customers may submit
inaccurate pricing or other inaccurate catalog information. Even though such
inaccuracies are not caused by our work and are not within our control, such
inaccuracies could deter current and potential customers from using our products
and could harm our business, operating results and financial condition.
THE MARKETS IN WHICH WE COMPETE EXPERIENCE RAPID TECHNOLOGICAL CHANGE. IF WE DO
NOT RESPOND TO THE TECHNOLOGICAL ADVANCES OF THE MARKETPLACE, WE COULD SERIOUSLY
HARM OUR BUSINESS.
Enterprises are increasing their focus on decision-support solutions for
e-business challenges. As a result, they are requiring their application
software vendors to provide greater levels of functionality and broader product
offerings. Moreover, competitors continue to make rapid technological advances
in computer hardware and software technology and frequently introduce new
products, services and enhancements. We must continue to enhance our current
product line and develop and introduce new products and services that keep pace
with the technological developments of our competitors. We must also satisfy
increasingly sophisticated customer requirements. If we cannot successfully
respond to the technological advances of others, or if our new products or
product enhancements and services do not achieve market acceptance, these events
could impact our business, operating results and financial condition.
IF USE OF THE INTERNET FOR COMMERCE AND COMMUNICATION DOES NOT INCREASE AS WE
ANTICIPATE, OUR BUSINESS WILL SUFFER.
We are offering new and enhanced products and services, which depend on
increased acceptance and use of the Internet as a medium for commerce and
communication. Rapid growth in the use of the Internet is a recent phenomenon.
As a result, acceptance and use may not continue to develop at historical rates,
and a sufficiently broad base of business customers may not adopt or continue to
use the Internet as a medium of commerce. Demand and market acceptance for
recently introduced services and products over the Internet are subject to a
high level of uncertainty, and there exist few proven services and products.
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Our business could be seriously harmed if:
o use of the Internet and other online services does not continue to
increase or increases more slowly than expected;
o the necessary communication and computer network technology underlying
the Internet and other online services does not effectively support any
expansion that may occur;
o new standards and protocols are not developed or adopted in a timely
manner; or
o for any other reason -- such as concerns about security, reliability,
cost, ease of use, accessibility or quality of service -- the Internet
does not create a viable commercial marketplace, inhibiting the
development of electronic commerce and reducing the need for and
desirability of our products and services.
FUTURE REGULATION OF THE INTERNET MAY SLOW ITS GROWTH, RESULTING IN DECREASED
DEMAND FOR OUR PRODUCTS AND SERVICES AND INCREASED COSTS OF DOING BUSINESS.
Due to increasing popularity and use of the Internet, it is possible that
state, federal and international regulators could adopt laws and regulations
that impose additional burdens on companies conducting business online. For
example, the growth and development of the market for Internet-based services
may prompt calls for more stringent consumer protection laws. Moreover, the
applicability to the Internet of existing laws in various jurisdictions
governing issues such as property ownership, sales tax, libel and personal
privacy is uncertain and may take years to resolve. Any new legislation or
regulation, the application of laws and regulations from jurisdictions whose
laws do not currently apply to our business, or the application of existing laws
and regulations to the Internet and other online services could decrease the
expansion of the Internet, causing our costs to increase and our growth to be
harmed.
CONCERNS THAT OUR PRODUCTS DO NOT ADEQUATELY PROTECT THE PRIVACY OF CONSUMERS
COULD INHIBIT SALES OF OUR PRODUCTS.
One of the principal features of our customer management software
applications is the ability to develop and maintain profiles of consumers for
use by businesses. Typically, these products capture profile information when
consumers, business customers and employees visit a Web site and volunteer
information in response to survey questions concerning their backgrounds,
interests and preferences. Our products augment these profiles over time by
collecting usage data. Although we have designed our customer management
products to enable the development of applications that permit Web site visitors
to prevent the distribution of any of their personal data beyond that specific
Web site, privacy concerns may nevertheless cause visitors to resist providing
the personal data necessary to support this profiling capability. If we cannot
adequately address consumers' privacy concerns, these concerns could seriously
harm our business, financial condition and operating results.
IF OUR ENCRYPTION TECHNOLOGY FAILS TO ENSURE THE SECURITY OF OUR CUSTOMERS'
ONLINE TRANSACTIONS, SERIOUS HARM TO OUR BUSINESS COULD RESULT.
The secure exchange of value and confidential information over public
networks is a significant concern of consumers engaging in online transactions
and interaction. Our customer management software applications use encryption
technology to provide the security necessary to effect the secure exchange of
value and confidential information. Advances in computer capabilities, new
discoveries in the field of cryptography or other events or developments could
result in a compromise or breach of the algorithms that these applications use
to protect customer transaction data. If any compromise or breach were to occur,
it could seriously harm our business, financial condition and operating results.
RAPID GROWTH IN OUR OPERATIONS COULD INCREASE DEMANDS ON OUR MANAGERIAL AND
OPERATIONAL RESOURCES.
We have experienced rapid growth. Revenues have increased to approximately
$748.4 million for the nine months ended September 30, 2000 from approximately
$395.8 million for the nine months ended September 30, 1999. Revenues increased
from approximately $571.1 million in 1999, from approximately $369.2 million in
1998 and from approximately $221.8 million in 1997. Our employee headcount has
increased to approximately 5,350 at September 30, 2000, from approximately 2,800
at December 31, 1999, and from approximately 2,350 at December 31, 1998. We have
also increased the scope of our operating and financial systems and the
geographic distribution of our operations and customers. This growth has placed
increased demands on our management and operations, and if our rapid growth
continues, may continue to place increasing demands on our management and
operations. Our officers and other key employees will need to implement and
improve
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our operational, customer support and financial control systems and effectively
expand, train and manage our employee base. Further, we expect that we will be
required to manage an increasing number of relationships with various customers
and other third parties. We may not be able to manage future expansion
successfully, and our inability to do so would harm our business, operating
results and financial condition.
WE MAY NOT SUCCESSFULLY INTEGRATE OR REALIZE THE INTENDED BENEFITS OF OUR RECENT
ACQUISITIONS.
In April 2000, we acquired SupplyBase, Inc. and in June 2000, we acquired
Aspect Development, Inc. In addition, we have acquired other businesses and
products to help broaden and strengthen our product portfolio. The success of
these acquisitions will depend primarily on our ability to:
o retain, motivate and integrate the acquired personnel;
o integrate multiple information systems; and
o integrate acquired software with our existing products and services.
We may encounter difficulties in integrating our operations and products with
those of SupplyBase, Aspect and other acquisitions. We may not realize the
benefits that we anticipated when we made these acquisitions. Our failure to
successfully integrate our operations and products with those of SupplyBase,
Aspect and other acquisitions could seriously harm our business, operating
results and financial condition.
WE MAY MAKE FUTURE ACQUISITIONS OR ENTER INTO JOINT VENTURES THAT MAY NOT BE
SUCCESSFUL.
In the future, we may acquire additional businesses, products and
technologies, or enter into joint venture arrangements, that could complement or
expand our business. Management's negotiations of potential acquisitions or
joint ventures and management's integration of acquired businesses, products or
technologies could divert their time and resources. Future acquisitions could
cause us to issue dilutive equity securities, incur debt or contingent
liabilities, amortize goodwill and other intangibles, or write off in-process
research and development and other acquisition-related expenses that could
seriously harm our financial condition and operating results. Further, we may
not be able to properly integrate acquired businesses, products or technology
with our existing operations or train, retain and motivate personnel from the
acquired business. If we are unable to fully integrate an acquired business,
product or technology or train, retain and motivate personnel from the acquired
business, we may not receive the intended benefits of that acquisition.
WE FACE RISKS ASSOCIATED WITH INTERNATIONAL SALES AND OPERATIONS THAT COULD HARM
OUR COMPANY.
Our international operations are subject to risks inherent in international
business activities. In addition, we may expand our international operations in
the future, which would increase our exposure to these risks. The risks we face
internationally include:
o difficulties and costs of staffing and managing geographically disparate
operations;
o longer accounts receivable payment cycles in certain countries;
o compliance with a variety of foreign laws and regulations;
o unexpected changes in regulatory requirements;
o overlap of different tax structures;
o greater difficulty in safeguarding intellectual property;
o import and export licensing requirements;
o trade restrictions;
o changes in tariff rates;
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o political instability; and
o general economic conditions in international markets.
CHANGES IN THE VALUE OF THE U.S. DOLLAR, AS COMPARED TO THE CURRENCIES OF
FOREIGN COUNTRIES WHERE WE TRANSACT BUSINESS, COULD HARM OUR OPERATING RESULTS.
To date, our international revenues have been denominated primarily in U.S.
dollars. The majority of our international expenses and some revenues have been
denominated in currencies other than the U.S. dollar. Therefore, changes in the
value of the U.S. dollar as compared to these other currencies may adversely
affect our operating results. As our international operations expand, we will
use an increasing number of foreign currencies, causing our exposure to currency
exchange rate fluctuations to increase. Although we have implemented limited
hedging programs to mitigate our exposure to currency fluctuations, currency
exchange rate fluctuations have caused, and will continue to cause, currency
transaction gains and losses. While these transactional gains and losses have
not been material to date, they may harm our business, results of operations or
financial condition in the future.
THE LOSS OF ANY OF OUR KEY PERSONNEL OR OUR FAILURE TO ATTRACT ADDITIONAL
PERSONNEL COULD SERIOUSLY HARM OUR COMPANY.
We rely upon the continued service of a relatively small number of key
technical and senior management personnel. Our future success depends on
retaining our key employees and our continuing ability to attract, train and
retain other highly qualified technical and managerial personnel. Very few of
our key technical or senior management personnel are bound by employment
agreements. As a result, our employees could leave with little or no prior
notice. In the past, we have had difficulty recruiting qualified personnel. We
may not be able to attract, assimilate or retain other highly qualified
technical and managerial personnel in the future. Our loss of any of our key
technical and senior management personnel or our inability to attract, train and
retain additional qualified personnel could seriously harm our business,
operating results and financial condition.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR FACE A
CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE OUR
INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR SIGNIFICANT DAMAGES.
We rely primarily on a combination of copyright, trademark and trade secret
laws, confidentiality procedures and contractual provisions to protect our
proprietary rights. In addition, we generally license enterprise products to end
users in object code (machine-readable) format, and our license agreements
generally allow the use of enterprise products solely by the customer for
internal purposes without the right to sublicense or transfer the enterprise
products. However, these measures afford only limited protection. Unauthorized
parties may attempt to copy aspects of our products or to obtain and use
information that we regard as proprietary. Although we believe software piracy
may be a problem, we are not able to determine the extent to which piracy of our
software products exists. Policing unauthorized use of our products is
difficult, and we cannot be certain that the steps we have taken will prevent
misappropriation of our technology. This is particularly true in foreign
countries where the laws may not protect proprietary rights to the same extent
as the laws of the United States and may not provide us with an effective remedy
against piracy.
As the number of products and competitors continues to grow, the
functionality of products in different industry segments is increasingly
overlapping. As a result, we increasingly may be subject to claims of
intellectual property infringement. Although we are not aware that any of our
products infringe upon the proprietary rights of third parties, third parties
may claim infringement by us with respect to current or future products. Any
infringement claims, with or without merit, could be time-consuming, result in
costly litigation or damages, cause product shipment delays or the loss or
deferral of sales, or require us to enter into royalty or licensing agreements.
If we enter into royalty or licensing agreements in settlement of any litigation
or claims, these agreements may not be on terms acceptable to us. Unfavorable
royalty and licensing agreements could seriously harm our business, operating
results and financial condition.
We resell some software that we license from third parties. Although we may
continue this practice, third-party software licenses may not continue to be
available to us on commercially reasonable terms. Our inability to maintain or
obtain any of these software licenses will delay or reduce our product shipments
until we can identify, license and integrate equivalent software. Any loss of
these licenses or delay or reduction in product shipments could harm our
business, operating results and financial condition.
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OUR PRODUCTS' FAILURE TO REMAIN COMPATIBLE WITH EXISTING AND NEW COMPUTERS AND
SOFTWARE OPERATING SYSTEMS WOULD SERIOUSLY HARM OUR BUSINESS.
Our i2 TradeMatrix software can operate on hardware platforms from Digital
Equipment, Hewlett-Packard, IBM and Sun Microsystems and operating systems from
Sun Microsystems and Microsoft. i2 TradeMatrix can access data from most
widely-used structured query language databases, including Informix, Oracle and
Sybase. If additional hardware or software platforms gain significant market
acceptance, we may be required to attempt to adapt i2 TradeMatrix to those
platforms in order to remain competitive. However, those platforms may not be
architecturally compatible with the i2 TradeMatrix software product design, and
we may not be able to adapt i2 TradeMatrix to those additional platforms on a
timely basis, or at all. Any failure to maintain compatibility with existing
platforms or to adapt to new platforms that achieve significant market
acceptance would seriously harm our business, operating results and financial
condition.
OUR SOFTWARE IS COMPLEX AND MAY CONTAIN UNDETECTED ERRORS.
Our software programs are complex and may contain undetected errors or
"bugs." Although we conduct extensive testing, we may not discover bugs until
our customers install and use a given product or until the volume of services
that a product provides increases. On occasion, we have experienced delays in
the scheduled introduction of new and enhanced products because of bugs.
Undetected errors could result in loss of customers or reputation, adverse
publicity, loss of revenues, delay in market acceptance, diversion of
development resources, increased insurance costs or claims against us by
customers, any of which could seriously harm our business, operating results and
financial condition.
RELEASES OF AND PROBLEMS WITH NEW PRODUCTS MAY CAUSE PURCHASING DELAYS, WHICH
WOULD HARM OUR REVENUES.
Customers may delay their purchasing decisions in anticipation of our new or
enhanced products, or products of competitors. Delays in customer purchasing
decisions could seriously harm our business and operating results. Moreover,
significant delays in the general availability of new releases, significant
problems in the installation or implementation of new releases, or customer
dissatisfaction with new releases could seriously harm our business, operating
results and financial condition.
OUR FAILURE TO SUCCESSFULLY RECRUIT AND RETAIN TECHNICAL AND IMPLEMENTATION
PERSONNEL COULD REDUCE OUR LICENSE REVENUES OR LIMIT THE GROWTH OF OUR LICENSE
REVENUES.
A shortage of qualified technical sales support personnel could harm our
ability to expand sales and enter into new vertical markets. We will depend on
our trained implementation personnel or those of independent consultants to
implement our products and services. A shortage in the number of trained
implementation personnel could limit our ability to implement our software and
services on a timely and effective basis. Delayed or ineffective implementation
of our software and services may limit our ability to expand our revenues and
may result in customer dissatisfaction and harm to our reputation. Any of these
events could seriously harm our business, operating results and financial
condition.
WE MAY BECOME SUBJECT TO PRODUCT LIABILITY CLAIMS.
Our license agreements typically seek to limit our exposure to product
liability claims from our customers. However, these contract provisions may not
preclude all potential claims. Additionally, our general liability insurance may
be inadequate to protect us from all liability that we may face. Product
liability claims could require us to spend significant time and money in
litigation or to pay significant damages. As a result, any claim, whether or not
successful, could harm our reputation and business, operating results and
financial condition.
OUR EXECUTIVE OFFICERS AND DIRECTORS HAVE SIGNIFICANT INFLUENCE OVER STOCKHOLDER
VOTES.
Our executive officers and directors together beneficially own approximately
34.1% of the total voting power of our company. Accordingly, these stockholders
will have significant influence in determining the composition of our Board of
Directors and will continue to have significant influence over our affairs.
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<PAGE> 12
OUR CHARTER AND BYLAWS HAVE ANTI-TAKEOVER PROVISIONS.
Provisions of our Certificate of Incorporation and our Bylaws as well as the
Delaware General Corporation Law could make it more difficult for a third party
to acquire us, even if doing so would be beneficial to our stockholders. We are
subject to the provisions of Section 203 of the Delaware General Corporation
Law, which restricts certain business combinations with interested stockholders.
The combination of these provisions may inhibit a non-negotiated merger or other
business combination.
OUR STOCK PRICE HISTORICALLY HAS BEEN VOLATILE, WHICH MAY MAKE IT MORE DIFFICULT
FOR YOU TO RESELL COMMON STOCK WHEN YOU WANT AT PRICES YOU FIND ATTRACTIVE.
The market price of our common stock has been volatile in the past, and the
market price of our common stock may be volatile in the future. The following
factors may significantly affect the market price of our common stock:
o quarterly variations in our results of operations;
o the announcement of new products or product enhancements by us or our
competitors;
o technological innovations by us or our competitors; and
o general market conditions or market conditions specific to particular
industries.
In particular, the stock prices of many companies in the technology and emerging
growth sectors have fluctuated widely due to events unrelated to their operating
performance. These fluctuations may harm the market price of our common stock.
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by the selling
stockholder named below. The selling stockholder has not had a material
relationship with us within the past three years other than as a result of its
ownership of the shares of i2. No estimate can be given as to the amount of
shares that will be held by the selling stockholder after completion of this
offering. The shares offered by this prospectus may be offered from time to time
by the selling stockholder named below.
<TABLE>
<CAPTION>
NUMBER OF SHARES TO BE
NUMBER OF SHARES OWNED AFTER THE OFFERING
OWNED BEFORE THE NUMBER OF SHARES ------------------------
NAME OF SELLING STOCKHOLDER OFFERING BEING OFFERED(1) NUMBER PERCENT
--------------------------- ---------------- ----------------- -------- ---------
<S> <C> <C> <C> <C>
Caterpillar Inc............ 109,514 109,514 -- *
</TABLE>
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* Represents beneficial ownership of less than one percent.
(1) This prospectus also shall cover any additional shares of common stock which
become issuable in connection with the shares registered for sale by this
prospectus by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the receipt of consideration
which results in an increase in the number of our outstanding shares of
common stock.
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<PAGE> 13
PLAN OF DISTRIBUTION
We are registering all 109,514 shares to be sold under this prospectus
on behalf of the selling stockholder named in the table above. On September 25,
2000, we issued 109,514 shares of common stock to Caterpillar as consideration
for component procurement and sourcing software that we bought from Caterpillar.
We will receive no proceeds from this offering. The selling stockholder named in
the table above or pledgees, donees, transferees or other successors-in-interest
selling shares received from the named selling stockholder as a gift,
partnership distribution or other non-sale-related transfer after the date of
this prospectus (collectively, the "Selling Stockholders") may sell the shares
from time to time. The Selling Stockholders will act independently of us in
making decisions with respect to the timing, manner and size of each sale. The
sales may be made in the Nasdaq National Market or in the over-the-counter
market or otherwise, at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
Selling Stockholders may effect such transactions by selling the shares to or
through broker-dealers. The shares may be sold by one or more of, or a
combination of, the following:
o a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
o in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In effecting
sales, broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate in the resales.
The Selling Stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with Selling Stockholders. The
Selling Stockholders also may sell shares short and redeliver the shares to
close out such short positions. The Selling Stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The Selling Stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
Selling Stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, or the Securities Act, in
connection with sales of the shares. Accordingly, any such commission, discount
or concession received by them and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts or commissions
under the Securities Act. Because Selling Stockholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, the
Selling Stockholders will be subject to the prospectus delivery requirements of
the Securities Act. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 promulgated under the Securities Act may
be sold under Rule 144 rather than pursuant to this prospectus.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, or the Exchange Act, any person engaged in the distribution of the
shares may not simultaneously engage in market making activities with
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<PAGE> 14
respect to our common stock for a period of two business days prior to the
commencement of such distribution. In addition, each Selling Stockholder will be
subject to applicable provisions of the Exchange Act and the associated rules
and regulations under the Exchange Act, including Regulation M, which provisions
may limit the timing of purchases and sales of shares of our common stock by the
Selling Stockholders. We will make copies of this prospectus available to the
Selling Stockholders and have informed them of the need for delivery of copies
of this prospectus to purchasers at or prior to the time of any sale of the
shares.
We will file a supplement to this prospectus, if required, pursuant to
Rule 424(b) under the Securities Act upon being notified by a Selling
Stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
o The name of each such Selling Stockholder and of the
participating broker-dealer(s);
o The number of shares involved;
o The price at which such shares were sold;
o The commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable;
o That such broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by reference
in this prospectus; and
o Other facts material to the transaction.
In addition, upon being notified by a Selling Stockholder that a donee
or pledgee intends to sell more than 500 shares, we will file a supplement to
this prospectus.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The Selling Stockholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The Selling
Stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be
passed upon for us by Brobeck, Phleger & Harrison LLP, Austin, Texas.
EXPERTS
The consolidated financial statements included in our annual report on
Form 10-K for the year ended December 31, 1999, incorporated by reference in
this prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of Aspect Development, Inc. as of
December 31, 1999 and 1998, incorporated by reference in this prospectus, have
been incorporated herein in reliance on the report of Arthur Andersen LLP, San
Jose, California, independent accountants, given on the authority of that firm
as experts in accounting and auditing.
The consolidated financial statements of Aspect Development, Inc. for
the year ended December 31, 1997 that are included in Aspect Development, Inc.'s
Annual Report (Form 10-K) for the year ended December 31, 1999, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
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<PAGE> 15
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WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY STATE
IN WHICH THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS
IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER
THAT DATE.
109,514 SHARES
[i2 LOGO]
COMMON STOCK
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PROSPECTUS
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November 16, 2000
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